Two million sign up for faster mobile internet

EE, Britain’s biggest mobile operator, has vowed to accelerate the rollout of its 4G network to ensure its data revenues increase to make up for the decline in text messaging driven by WhatsApp and similar services.

The operator said today that it had added a further 816,000 4G customers in the last three months of 2013 to take its total to two million.

Olaf Swantee, EE’s chief executive, said the company was alive to the threat from WhatsApp, which accounts for the third highest volume of data for any communications app on its 4G network.

Britons sent 145 billion text messages last year, 10 billion fewer than in 2012. Meanwhile the number of messages sent via smartphone apps nearly trebled to 160 billion, according to Deloitte estimates.

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He said the growth of 4G meant an increasing proportion of turnover comes from mobile internet use rather than the traditional call and text services that are threatened by WhatsApp.

Data services accounted for 44pc of EE revenues in the fourth quarter, up from 34pc in the same period a year earlier.

By the end of this year the operator aims to have six million people on its 4G network, although the majority of customers will still be on 3G packages inherited from the merger of Orange and T-Mobile.

Along with cost savings from the merger, Britons’ appetite for faster mobile internet access via 4G helped improve EE’s profit margin last year. The operator, jointly owned by Orange and Deutsche Telekom, reported full-year earnings of £1.57bn on a turnover of £6.48bn.

Turnover was down 2.6pc compared with 2012 as a result of cuts to international roaming charges and the fees mobile operators levy on each other for connecting calls, imposed by regulators. Stripping out those impacts, underlying service revenue, the measure of core voice call, text, and data revenues, was flat.

EE reported a 3.8pc decline in total customer numbers over the year to 27.1 million. Its monthly contract customer base grew by 5.6pc but it lost 17pc of its pay-as-you-go customers.

The company said contract customers are more valuable and its declining pre-pay base reflects an industry-wide trend.

Vodafone and O2 are now striving to catch up with EE’s lead in the 4G market, established over a 10-month head start. They both began rolling out their new networks at the end of August last year after being forced to wait for an Ofcom aution of new spectrum capacity and are behind on coverage and customers. Vodafone announced this week it had reached the 500,000 customer milestone, several months sooner than EE did, however.

Mr Swantee said the decision by Orange and Deutsche Telecom not to go ahead with an Initial Public Offering that had been mooted for this year would not affect his ability to invest more in EE’s network.

He said that among communications apps only Skype and Microsoft’s webmail app account for more data demand on EE’s 4G network than WhatsApp.

Skype allows free video calling, which requires a lot of bandwidth compared with WhatsApp messages. Microsoft's webmail app is less popular than Skype or WhatsApp, but is coded in a way that creates an unusually high data demand for app that deals mostly with text.